Finance Bill

House of Commons

Session 2007 - 08
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Finance Bill

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 4 — Restrictions on powers
385

Power to mark assets and to record information
17
The powers under Part 2 of this Schedule include—
(a)
power to mark business assets, and anything containing business
assets, for the purpose of indicating that they have been inspected,
and
(b)
power to obtain and record information (whether electronically or
otherwise) relating to the premises, assets and documents that have
been inspected.
Part 4
Restrictions on powers
Documents not in person’s possession or power
18
An information notice only requires a person to produce a document if it is
in the person’s possession or power.
Types of information
19    (1)
An information notice does not require a person to provide or produce—
(a)
information that relates to the conduct of a pending appeal relating
to tax or any part of a document containing such information, or
(b)
journalistic material (as defined in section 13 of the Police and
Criminal Evidence Act 1984 (c. 60)) or information contained in such
material.
      (2)
An information notice does not require a person to provide or produce
personal records (as defined in section 12 of the Police and Criminal
Evidence Act 1984) or information contained in such records, subject to sub-
paragraph (3).
      (3)
An information notice may require a person—
(a)
to produce documents, or copies of documents, that are personal
records, omitting any information whose inclusion (whether alone or
with other information) makes the original documents personal
records (“personal information”), and
(b)
to provide any information contained in such records that is not
personal information.
Old documents
20
An information notice may not require a person to produce a document if
the whole of the document originates more than 6 years before the date of
the notice, unless the notice is given by, or with the agreement of, an
authorised officer.
Taxpayer notices
21    (1)
Where a person has made a tax return in respect of a chargeable period
under section 8, 8A or 12AA of TMA 1970 (returns for purpose of income tax
and capital gains tax), a taxpayer notice may not be given for the purpose of
checking that person’s income tax position or capital gains tax position in
relation to the chargeable period.

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 4 — Restrictions on powers
386

      (2)
Where a person has made a tax return in respect of a chargeable period
under paragraph 3 of Schedule 18 to FA 1998 (company tax returns), a
taxpayer notice may not be given for the purpose of checking that person’s
corporation tax position in relation to the chargeable period.
      (3)
Sub-paragraphs (1) and (2) do not apply where, or to the extent that, any of
conditions A to D are met.
      (4)
Condition A is that a notice of enquiry has been given in respect of—
(a)
the return, or
(b)
a claim or election (or an amendment of a claim or election) made by
the person in relation to the chargeable period in respect of the tax (or
one of the taxes) to which the return relates (“relevant tax”),

and the enquiry has not been completed.
      (5)
In sub-paragraph (4), “notice of enquiry” means a notice under—
(a)
section 9A or 12AC of, or paragraph 5 of Schedule 1A to, TMA 1970,
or
(b)
paragraph 24 of Schedule 18 to FA 1998.
      (6)
Condition B is that an officer of Revenue and Customs has reason to suspect
that—
(a)
an amount that ought to have been assessed to relevant tax for the
chargeable period may not have been assessed,
(b)
an assessment to relevant tax for the chargeable period may be or
have become insufficient, or
(c)
relief from relevant tax given for the chargeable period may be or
have become excessive.
      (7)
Condition C is that the notice is given for the purpose of obtaining any
information or document that is also required for the purpose of checking
that person’s VAT position.
      (8)
Condition D is that the notice is given for the purpose of obtaining any
information or document that is required (or also required) for the purpose
of checking the person’s position as regards any deductions or repayments
referred to in paragraph 64(2) (PAYE etc).
Deceased persons
22
An information notice given for the purpose of checking the tax position of
a person who has died may not be given more than 4 years after the person’s
death.
Privileged communications between professional legal advisers and clients
23    (1)
An information notice does not require a person—
(a)
to provide privileged information, or
(b)
to produce any part of a document that is privileged.
      (2)
For the purpose of this Schedule, information or a document is privileged if
it is information or a document in respect of which a claim to legal
professional privilege or, in Scotland to confidentiality of communications
as between client and professional legal adviser, could be maintained in
legal proceedings.

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 4 — Restrictions on powers
387

      (3)
The Commissioners may by regulations make provision for the resolution
by the First-tier Tribunal of disputes as to whether any information or
document is privileged.
      (4)
The regulations may, in particular, make provision as to—
(a)
the custody of a document while its status is being decided, and
(b)
the procedures to be followed.
Auditors
24    (1)
An information notice does not require a person who has been appointed as
an auditor for the purpose of an enactment—
(a)
to provide information held in connection with the performance of
the person’s functions under that enactment, or
(b)
to produce documents which are that person’s property and which
were created by that person or on that person’s behalf for or in
connection with the performance of those functions.
      (2)
Sub-paragraph (1) has effect subject to paragraph 26.
Tax advisers
25    (1)
An information notice does not require a tax adviser—
(a)
to provide information about relevant communications, or
(b)
to produce documents which are the tax adviser’s property and
consist of relevant communications.
      (2)
Sub-paragraph (1) has effect subject to paragraph 26.
      (3)
In this paragraph—
“relevant communications” means communications between the tax
adviser and—
(a)
a person in relation to whose tax affairs he has been
appointed, or
(b)
any other tax adviser of such a person,
the purpose of which is the giving or obtaining of advice about any
of those tax affairs, and
“tax adviser” means a person appointed to give advice about the tax
affairs of another person (whether appointed directly by that person
or by another tax adviser of that person).
Auditors and tax advisers: supplementary
26    (1)
Paragraphs 24(1) and 25(1) do not have effect in relation to—
(a)
information explaining any information or document which the
person to whom the notice is given has, as tax accountant, assisted
any client in preparing for, or delivering to, HMRC, or
(b)
a document which contains such information.
      (2)
In the case of a notice given under paragraph 5, paragraphs 24(1) and 25(1)
do not have effect in relation to—
(a)
any information giving the identity or address of a person to whom
the notice relates or of a person who has acted on behalf of such a
person, or

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 5 — Appeals against information notices
388

(b)
a document which contains such information.
      (3)
Paragraphs 24(1) and 25(1) are not disapplied by sub-paragraph (1) or (2) if
the information in question has already been provided, or a document
containing the information in question has already been produced, to an
officer of Revenue and Customs.
27    (1)
This paragraph applies where paragraph 24(1) or 25(1) is disapplied in
relation to a document by paragraph 26(1) or (2).
      (2)
An information notice that requires the document to be produced has effect
as if it required any part or parts of the document containing the information
mentioned in paragraph 26(1) or (2) to be produced.
Corresponding restrictions on inspection of business documents
28
An officer of Revenue and Customs may not inspect a business document
under Part 2 of this Schedule if or to the extent that, by virtue of this Part of
this Schedule, an information notice given at the time of the inspection to the
occupier of the premises could not require the occupier to produce the
document.
Part 5
Appeals against information notices
Right to appeal against taxpayer notice
29    (1)
Where a taxpayer is given a taxpayer notice, the taxpayer may appeal to the
First-tier Tribunal against the notice or any requirement in the notice.
      (2)
Sub-paragraph (1) does not apply to a requirement in a taxpayer notice to
provide any information, or produce any document, that forms part of the
taxpayer’s statutory records.
      (3)
Sub-paragraph (1) does not apply if the First-tier Tribunal approved the
giving of the notice in accordance with paragraph 3.
Right to appeal against third party notice
30    (1)
Where a person is given a third party notice, the person may appeal to the
First-tier Tribunal against the notice or any requirement in the notice on the
ground that it would be unduly onerous to comply with the notice or
requirement.
      (2)
Sub-paragraph (1) does not apply to a requirement in a third party notice to
provide any information, or produce any document, that forms part of the
taxpayer’s statutory records.
      (3)
Sub-paragraph (1) does not apply if the First-tier Tribunal approved the
giving of the notice in accordance with paragraph 3.
Right to appeal against notice given under paragraph 5
31
Where a person is given a notice under paragraph 5, the person may appeal
to the First-tier Tribunal against the notice or any requirement in the notice

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 6 — Special cases
389

on the ground that it would be unduly onerous to comply with the notice or
requirement.
Procedure
32    (1)
Notice of an appeal under this Part of this Schedule must be given—
(a)
in writing,
(b)
before the end of the period of 30 days beginning with the date on
which the information notice is given, and
(c)
to the officer of Revenue and Customs by whom the information
notice was given.
      (2)
Notice of an appeal under this Part of this Schedule must state the grounds
of appeal.
      (3)
On an appeal the First-tier Tribunal may—
(a)
confirm the information notice or a requirement in the information
notice,
(b)
vary the information notice or such a requirement, or
(c)
set aside the information notice or such a requirement.
      (4)
Where the First-tier Tribunal confirms or varies the information notice or a
requirement, the person to whom the information notice was given must
comply with the notice or requirement—
(a)
within such period as is specified by the Tribunal, or
(b)
if the Tribunal does not specify a period, within such period as is
reasonably specified in writing by an officer of Revenue and
Customs following the Tribunal’s decision.
      (5)
A decision by the First-tier Tribunal on an appeal under this Part of this
Schedule is final.
      (6)
Subject to this paragraph, the provisions of Part 5 of TMA 1970 relating to
appeals have effect in relation to appeals under this Part of this Schedule as
they have effect in relation to an appeal against an assessment to income tax.
Special cases
33
This Part of this Schedule has effect subject to Part 6 of this Schedule.
Part 6
Special cases
Supply of goods or services etc
34    (1)
This paragraph applies to a taxpayer notice or third party notice that refers
only to information or documents that form part of any person’s statutory
records and relate to—
(a)
the supply of goods or services,
(b)
the acquisition of goods from another member State, or
(c)
the importation of goods from a place outside the member States in
the course of carrying on a business.

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 6 — Special cases
390

      (2)
Paragraph 3(1) (requirement for consent to, or approval of, third party
notice) does not apply to such a notice.
      (3)
Where a person is given such a notice, the person may not appeal to the First-
tier Tribunal against the notice or any requirement in the notice.
      (4)
Sections 5, 11 and 15 of, and Schedule 4 to, VATA 1994, and any orders made
under those provisions, apply for the purposes of this paragraph as if it were
part of that Act.
Groups of undertakings
35    (1)
This paragraph applies where an undertaking is a parent undertaking in
relation to another undertaking (a subsidiary undertaking).
      (2)
Where a third party notice is given to any person for the purpose of checking
the tax position of the parent undertaking and any of its subsidiary
undertakings, paragraph 2 only requires the notice to state this and name the
parent undertaking.
      (3)
In relation to such a notice—
(a)
in paragraphs 3 and 4 (approval etc of notices and copying third
party notices to taxpayer), the references to the taxpayer have effect
as if they were references to the parent undertaking, but
(b)
in paragraph 30(2) (no appeal in relation to taxpayer’s statutory
records), the reference to the taxpayer has effect as if it were a
reference to the parent undertaking and each of its subsidiary
undertakings.
      (4)
Where a third party notice is given to the parent undertaking for the purpose
of checking the tax position of one or more subsidiary undertakings—
(a)
paragraphs 3(1) and 4(1) (approval etc of notices and copying third
party notices to taxpayer) do not apply to the notice, but
(b)
paragraph 21 (restrictions on giving taxpayer notice where taxpayer
has made tax return) applies as if the notice was a taxpayer notice or
taxpayer notices given to the subsidiary undertaking or each of the
subsidiary undertakings.
      (5)
Where a notice is given under paragraph 5 to the parent undertaking for the
purpose of checking the tax position of one or more subsidiary undertakings
whose identities are not known to the officer giving the notice, sub-
paragraph (3) of that paragraph (approval of First-tier Tribunal) does not
apply.
      (6)
Where a third party notice or a notice under paragraph 5 is given to the
parent undertaking for the purpose of checking the tax position of one or
more subsidiary undertakings, the parent undertaking may not appeal
against a requirement in the notice to produce any document that forms part
of the statutory records of the parent undertaking or any of its subsidiary
undertakings.
      (7)
In this paragraph, “parent undertaking”, “subsidiary undertaking” and
“undertaking” have the same meaning as in the Companies Acts (see
sections 1161 and 1162 of, and Schedule 7 to, the Companies Act 2006 (c. 46)).

Finance Bill (Volume II)
Schedule 36 — Information and inspection powers
Part 6 — Special cases
391

Change of ownership of companies
36    (1)
Sub-paragraph (2) applies where it appears to the Commissioners that—
(a)
there has been a change in the ownership of a company, and
(b)
in connection with that change a person (“the seller”) may be or
become liable to be assessed and charged to corporation tax under
section 767A or 767AA of ICTA.
      (2)
Paragraph 21 (restrictions on giving taxpayer notice where taxpayer has
made tax return) does not apply in relation to a taxpayer notice given to the
seller.
      (3)
Section 769 of ICTA applies for the purposes of determining when there has
been a change in the ownership of a company.
Partnerships
37    (1)
This paragraph applies where a business is carried on by two or more
persons in partnership.
      (2)
If a tax return has been made by any of the partners under section 12AA of
TMA 1970 (partnership returns) in respect of a chargeable period—
(a)
paragraph 21 (restrictions where taxpayer has made tax return) has
effect as if that return had been made by each of the partners in
respect of that chargeable period, and
(b)
for the purpose of that paragraph, Condition A is met in relation to a
partner if a notice of enquiry has been given, and an enquiry has not
been completed, in respect of that return or any other return
mentioned in paragraph 21(1) or (2) made by the partner in respect
of the chargeable period in question.
      (3)
Where a third party notice is given to any person (other than one of the
partners) for the purpose of checking the tax position of more than one of the
partners (in their capacity as such), paragraph 2 only requires the notice to
state this and give a name in which the partnership is registered for any
purpose.
      (4)
In relation to such a notice—
(a)
in paragraphs 3 and 4 (approval etc of notices and copying third
party notices to taxpayer), the references to the taxpayer have effect
as if they were references to at least one of the partners, and
(b)
in paragraph 30(2) (no appeal in relation to taxpayer’s statutory
records), the reference to the taxpayer has effect as if it were a
reference to each of the partners.
      (5)
Where a third party notice is given to one of the partners for the purpose of
checking the tax position of one or more of the other partners (in their
capacity as such), paragraphs 3(1) and 4(1) (approval etc of notices and
copying third party notices to taxpayer) do not apply.
      (6)
Where a notice is given under paragraph 5 to one of the partners for the
purpose of checking the tax position of one or more of the other partners
whose identities are not known to the officer giving the notice, sub-
paragraph (3) of that paragraph (approval of First-tier Tribunal) does not
apply.